A look at factors that explain wage inequality – including classical economic theory and labour market imperfections. Readers Question: Idealized free market theory argues that it is automatic for each worker to receive just what he or she is worth; otherwise, an “underpaid” worker could just look elsewhere to bid a higher salary. Could established …
Behavioural economics examines the psychology behind economic decision making and economic activity. Behavioural economics examines the limitation of the assumption individuals are perfectly rational. Key people: Gary Becker, Daniel Kahneman, Richard Thaler, Robert J. Shiller, Concepts in behavioural economics Bounded rationality – making decisions based on limited information and from a narrow range of heuristics …
In a recent post, we looked at the advantages of free movement of labour. But, what about the problems which might arise from free movement of labour? Firstly, free movement of labour depends on the area in question. To make an easy contrast, initially, the EU was free movement of workers between 12 / 15 …
The exchange rate is the rate at which one currency trades against another on the foreign exchange market If the present exchange rate is £1=$1.42, this means that to go to America you would get $142 for £100. Similarly, if an American came to the UK, he would have to pay $142 to get £100. …
Readers Question: I’m a paper girl and I get £5.50 a week, 7 days a week, 2 rounds a day. Am I the only one that thinks this is a joke? From: Wages of Paper Boys It sounds a very bad deal. Paper rounds are not covered by statutory minimum wage laws, so wages are …
This is an economics revision guide (e-book) designed for A Level. It includes both AS and A2.
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Last updated June 2022.
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Discrimination in the labour market occurs when employers make decisions on wages and employment based on prejudices, such as race, gender, religion. It can lead to variations in wages for the same job and different employment rates. Kenneth Arrow defined discrimination as: “the valuation in the market-place of personal characteristics of the worker that are …
Interest rates are the cost of borrowing money. Interest rates are normally expressed as a % of the total borrowed, e.g. for a 30-year mortgage, a bank may charge 5% interest per year. Interest rates also show the return received on saving money in the bank or from an asset like a government bond. Different …